How Google and Facebook Make Money

If Google charged even a dime for every single search we make, then by now our bank accounts would be totally drained. Do you think you’ll ever post a status on Facebook or check in to your favorite restaurant if it instantly leads to a payment gateway page? Penny for your thoughts! Well surely, nobody is going to use these huge social platforms if they start charging us extensively.

But now the thought arises, how do they earn money? Is our valuable data their asset for generating big shot revenue?

Let’s get a fair idea, starting with Google!

Google

Google has become the synonym for ‘search’. But our point of discussion still is how do they make so much money?

About 89% of Google’s US$66 billion in revenue comes from advertising. Yeah you heard it right, it’s advertising, and only advertising. Google’s majority revenue comes from advertising platforms. Google’s ad business works wonders because search and advertising are such a great marriage. On Facebook, we’re not necessarily looking to buy anything. Thus for example, if a user types in a query like “safest car”, Google knows that this is a person who wants to buy a safe car, and Ford will be prepared to pay a lot of money to have Google suggest that they buy a Ford.

Once you type a particular search, then it doesn’t really matter whether you click on a non-paid “organic,” search result or one that Google has been paid for. It all comes down to delivering a search result that meets your needs in the best possible manner.

Of course, users issue a lot of queries that aren’t describing a problem that the user wants to solve. Google generally doesn’t show ads for such queries, since the potential ad revenue from showing a bad ad is outweighed by the likely increase in ad blindness or frustration with Google.

Google is one giant in the digital advertising space and is doing an excellent job!

Facebook

How many of you realize that Facebook is as addictive as drugs! If there is one reason Facebook might, and I mean this is still unproven, might have a better business model than Google, it is mobile. Facebook’s single most important revenue channel is advertising. The company has always been ad supported and most likely will always be ad supported.

Small businesses like doctors, lawyers, restaurants, and others are also responsible for a large amount of Facebook’s revenue generation through its ‘set your own customized campaign’ option. Also, Facebook’s intuitive user preference picks up your interests easily and flashes relevant ads according to these interests. In fact, if you change your relationship status to “Engaged”, you’ll probably start seeing a lot of adverts for online wedding shopping destinations! So basically, Facebook is all about you!

Believe it or not but we, the users are Facebook’s product and that is how they channel their revenue through smart advertising techniques.

Do you feel betrayed?

Don’t feel disheartened! Google and Facebook are the two leading heroes of social media advertising models—without whom you cannot imagine your life now. It doesn’t really matter how these companies manage to earn resources, as long as they provide free services to users worldwide. Another major concern is security, so if they tend to keep our privacy intact and serve our (and coming generations) needs and requirements we’ll love to use these services for a long tenure.

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